Creating and executing the most appropriate investment strategy for members versus meeting a benchmark performance hurdle – these are not mutually exclusive concepts, APRA’s deputy commissioner Helen Rowell has said.

Whether it’s the government’s proposed test, or APRA’s more multifaceted heatmap performance test, superannuation trustees should feel like they have the flexibility to deliver to the risk and return profile of their respective member bases, Rowell said during a Financial Services Council panel discussion on Monday.

Rowell’s comments on performance measurement came about following a question relating to the government’s Your Future, Your Super proposal and the industry’s subsequent response.

“The trustees have the flexibility to set their strategies in terms of what they think is right for members. Then they need to monitor that to ensure the strategy meets the outcome that’s expected. If you’re not meeting the benchmarks, if you’re not delivering value, then you have to change it,” she said.

Rowell (left, with ASIC’s Rhys Bollen and FSC’s Bianca Richardson) acknowledged APRA had resistance from the superannuation industry when the heatmap concept first emerged and she described the government’s latest proposed benchmark measure as in line with the work APRA has already done.

“We haven’t seen the wholesale shift to index hugging that everyone said would happen as a result [of the heatmap], nor do we think that should happen,” Rowell said.

She said she believed the heatmaps have been successful in the regulator’s eyes.

“We felt the heapmaps would be a game changer to get a sharper focus on lifting outcomes and that’s happened in our view,” Rowell said.

“It’s all about shining a light on what the underlying drivers of performance are and getting industry to think and look hard about the decisions and the choices they’re making when investing money for members and how that plays out in terms of outcomes,” she added.

Rowell said APRA is currently in the midst of what she described as one of the most significant data projects the regulator has undertaken in the superannuation space with a particular focus on choice funds where it has less data in comparison to MySuper products.

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